Budget 2016: chancellor's plans give financial firms opportunity to develop guidance solutions, says expert

Out-Law News | 16 Mar 2016 | 4:45 pm | 1 min. read

Plans to reform the way public financial guidance is delivered in the UK could present new opportunities to financial firms to develop their financial guidance tools, an expert has said.

In his Budget paper on Wednesday, UK chancellor George Osborne said he wants to "restructure the delivery of public financial guidance to make it more effective".

Under the plans the Money Advice Service, The Pensions Advisory Service and Pension Wise will face changes, with a new "pensions guidance body" and "slimmed down money guidance body" to be established.

"The government will restructure the statutory financial guidance providers – the Money Advice Service, The Pensions Advisory Service and Pension Wise – to ensure that consumers can access the help they need to make effective financial decisions," the Budget statement said.

"The new delivery model will direct more funding to the front line and focus support on areas of greatest consumer need. It will include: a new pensions guidance body, to make sure that consumers can get all their pensions questions answered in one place, at all stages of their lives; a new, slimmed down money guidance body charged with identify gaps in the financial guidance market and commissioning providers to fill these gaps to ensure that consumers can access the debt advice and money guidance they need," it said.

Insurance and wealth management expert Tobin Ashby of Pinsent Masons, the law firm behind Out-Law.com, said that these latest changes to be announced to public financial guidance follow on from the recommendations that stemmed from the Financial Advice Market Review (FAMR) published earlier this week.

FAMR was co-chaired by acting chief executive of the Financial Conduct Authority (FCA) Tracey McDermott and the Treasury's director-general of financial services, Charles Roxburgh. The review prompted 28 recommendations in total, including that the definition of regulated financial advice be "narrowed" and that firms be given more flexibility to help consumers make their own investment decisions.

"Whilst we are still digesting the proposals from the FAMR report, the chancellor has announced changes to the organisations providing public guidance, ostensibly to provide more focus on money and debt guidance customers need," Ashby said. "In an interesting development, he has also suggested other providers will be identified and commissioned by the new guidance organisation to fill gaps in the guidance available to customers on their financial decisions."

"There seems to be a clear move away from 'advice' terminology outside the regulated sphere towards 'guidance' for customers, which will help to remove at least one of the numerous areas of confusion surrounding the support of retail investment decisions. These proposals do appear to provide an opportunity for guidance capability to be developed alongside the activity arising from the FAMR report, but in trying to provide flexibility, stop short of a fully clear structure," he said.